Legal Aspect of IT Contracts <br />Manoj Nair<br />
IT Contracts<br />A surprising percentage of IT projects  end in conflict or are never completed.<br />The CPR Institute f...
IT Contracts<br />
IT Contracts- Ownership <br />The ownership of a software should be clear from the language of the contract <br />To under...
Definition of IPR  <br />
Intellectual Property Rights<br />
PATENTS<br />Patents<br />	- A patent is a twenty year exclusive monopoly on the right to make, use and sell a qualifying ...
PATENTS<br />An invention is not protected by patent law in the U.S. unless the U.S. Patent and Trademark Office issues a ...
Copy Rights<br />Copyright law protects original, creative expression in the tangible form of books, films, music and othe...
Copy Right Act 1957<br />IPR of computer software is covered under the copy right law.<br />Some of the provisions of the ...
Trade Secret <br />A trade secret is any formula, pattern, compound, device, process, tool, or mechanism that is not gener...
Protection Of IP Rights<br />
Confidentiality Agreements- One Way or Mutual <br />
Sample Confidentiality provision<br />	Except as set forth herein or as otherwise agreed by the parties in writing, each R...
Exceptions – CA <br />Typical Clause: <br />The obligations of confidentiality will not apply to<br />information that <br...
Return of materials<br />	Upon the request of Discloser, Recipient will promptly return to Discloser all Confidential<br /...
Warranties <br />A warranty is a promise or assurance in a contract given by one party to the other<br />In this warranty,...
Limitation of Liability <br />Vendor will not be liable for;<br />consequential damages<br /> defects relating to external...
Indemnity <br />vendor will indemnify the customer for liability to third parties arising out of the failure of any warran...
Some other provisions<br />Termination<br />Dispute Resolution <br />Force Majeure <br />Others ………<br />Specification/Spe...
Legal aspect of IT contracts
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Legal aspect of IT contracts

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Legal aspect of IT contracts

  1. 1. Legal Aspect of IT Contracts <br />Manoj Nair<br />
  2. 2. IT Contracts<br />A surprising percentage of IT projects end in conflict or are never completed.<br />The CPR Institute for Dispute Resolution (www.cpradr.org) cites statistics indicating that 50% of IT projectsfail.<br />Failures can arise from many causessome of them are:-<br />the company management has unrealistic expectations of what software can do<br />unrealistic expectation is created or reinforced by the unrealistic promises of the vendor<br />scope or requirements of the project may be inadequately defined by the corporation<br />Lack of communication, Project poorly managed by both parties….<br />
  3. 3. IT Contracts<br />
  4. 4. IT Contracts- Ownership <br />The ownership of a software should be clear from the language of the contract <br />To understand ownership concept properly one needs to understand intellectual property aspect of IT<br />Intellectual Property rights are at the foundation of software industry.<br />There are essentially four types of intellectual property rights that relevant to software<br />
  5. 5. Definition of IPR <br />
  6. 6. Intellectual Property Rights<br />
  7. 7. PATENTS<br />Patents<br /> - A patent is a twenty year exclusive monopoly on the right to make, use and sell a qualifying invention.<br /> - To obtain a U.S. patent, an inventor must apply to the Patent Office and demonstrate that the invention is new (as compared to prior technology), useful, and "nonobvious.<br />For example, patents can be obtained for Ideas, systems, methods, algorithms, and functions embodied in a software product: editing functions, user-interface features, compiling techniques, operating system techniques, program algorithms, menu arrangements, display presentations or arrangements, and program language translation method<br />
  8. 8. PATENTS<br />An invention is not protected by patent law in the U.S. unless the U.S. Patent and Trademark Office issues a patent.<br />lengthy -expensive, especially if the inventor is seeking patent protection in multiple countries<br />Enforcement of patent rights is also expensive<br />
  9. 9. Copy Rights<br />Copyright law protects original, creative expression in the tangible form of books, films, music and other works of art. In the commercial area, copyrights protect advertising materials, trade publications, label designs, operations manuals and photographs. Copyrights also protect computer software and databases<br />
  10. 10. Copy Right Act 1957<br />IPR of computer software is covered under the copy right law.<br />Some of the provisions of the Act dealt with:<br />The rights of copy right holder<br />Position on rentals of software<br />The right of the user to make backup copies<br />According to section 14 of this Act, it is illegal to make or distribute copies of copyrighted software without proper or specific authorization. <br />The violator can be tried under both civil and criminal law. <br />A civil and criminal action may be instituted for injunction, actual damages (including violator's profits) or statutory damages per infringement etc. Heavy punishment and fines for infringement of software copyright. Section 63 B stipulates a minimum jail term of 7 days, which can be extended up to 3 years. <br />
  11. 11. Trade Secret <br />A trade secret is any formula, pattern, compound, device, process, tool, or mechanism that is not generally known or discoverable by others.<br />Trade secrets are protected under state laws in the U.S. as long as the owner of the secrets takes the appropriate steps to protect their secrecy<br />
  12. 12. Protection Of IP Rights<br />
  13. 13. Confidentiality Agreements- One Way or Mutual <br />
  14. 14. Sample Confidentiality provision<br /> Except as set forth herein or as otherwise agreed by the parties in writing, each Recipient shall at all times, both during and after the Disclosure Period, (i) not disclose any Confidential Information of the other party or its affiliate to any person other than the Recipient’s employees or representatives who need to know such information; (ii) use the same care and discretion to avoid disclosure as the Recipient uses with respect to its own confidential information; (iii) not use any Confidential Information in the Recipient’s business, nor develop, market, license or sell any product, process or service based on any Confidential Information; and (iv) not modify, reverse engineer or create derivative works based on any computer code owned by the other party or its affiliate<br />Variation:<br />“use the information only for the purpose for which it was disclosed, or otherwise solely for the benefit of the Discloser.”<br />
  15. 15. Exceptions – CA <br />Typical Clause: <br />The obligations of confidentiality will not apply to<br />information that <br />was already rightfully known to the Recipient on a non-confidential basis before the Effective Date; <br />(ii) was independently developed by the Recipient; or <br />(iii) is publicly available when received, or thereafter becomes publicly available<br />iv) Information received from third Party<br />v) Disclosure required by law<br />
  16. 16. Return of materials<br /> Upon the request of Discloser, Recipient will promptly return to Discloser all Confidential<br /> Information and all copies thereof in Recipient’s possession or under Recipient’s control,<br /> and Recipient will destroy all copies thereof on Recipient’s computers, disks and<br /> other digital storage devices<br /> Other provisons- vide next slide<br />
  17. 17.
  18. 18. Warranties <br />A warranty is a promise or assurance in a contract given by one party to the other<br />In this warranty, the developer promises that the software will work the way the developer said it would and will fix it free of charge if it doesn't. Such warranties typically last from 90 days to one year after the software is delivered<br />Some Examples<br />Software does not infringe the rights of any third party<br />Software does not contain any known defects<br />The fees and hourly rates set forth in Schedule are the best rates vendor offers to its customers<br />Licensor expressly waives and disclaims any right or remedy it may have at law or in equity to de-install, disable or repossess the Software should Licensee fail to perform any of its obligations under this Agreement<br />
  19. 19. Limitation of Liability <br />Vendor will not be liable for;<br />consequential damages<br /> defects relating to external factors, i.e., integration between the licensed software and the licensee’s hardware or other programs.<br />software modifications done by licensee<br />Total labiality limited to the license fees paid last 12 months or the total amount the customer paid for the project.<br />
  20. 20. Indemnity <br />vendor will indemnify the customer for liability to third parties arising out of the failure of any warranties or the vendor’s breach of the agreement.<br />Indemnity duration<br />Indemnity to be capped<br />General liability or professional liabilty insurance <br />
  21. 21. Some other provisions<br />Termination<br />Dispute Resolution <br />Force Majeure <br />Others ………<br />Specification/Spec document<br />Delivery Schedule <br />Payment Schedule<br />Delays<br />Maintenance<br />

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